tl;dr
The Compound growth program is excited to announce a landmark achievement: receiving a 1.8M ARB grant from Arbitrum DAO, the largest grant Arbitrum awarded in this funding cycle—nearly double the amount of the next highest recipient. This grant, part of a 45M ARB fund aimed at ecosystem growth, will enable Compound to significantly enhance its markets on Arbitrum. The entire 1.8M ARB grant has to be distributed to the Compound users in 3 months. The funds will be streamed in tranches, which are tied to our reporting back to Arbitrum DAO every 2 weeks.
Background
Arbitrum DAO initiated a pilot program earlier this year to bolster its ecosystem, inviting applications in February. Following a comprehensive review process, the grants were approved by a Snapshot vote. Initially, Compound proposed a 5M ARB request. But as the 45M ARB fund was oversubscribed by 200%, applications were suggested to lower their ask or risk rejection. We adjusted to 1.8M ARB in response. The proposal received a total of 151 Million votes in support on Arbitrum DAO.
Grant Conditions and Process
The 1.8M ARB will be disbursed to Compound in tranches, with the following stipulations:
- Initial Disbursement: The first requested tranche is 800K ARB.
- Utilization: Funds must be used exclusively as user incentives; sale of ARB is prohibited.
- Reporting: Bi-weekly updates to the Arbitrum community are mandatory to ensure transparency.
- Security: Funds will be transferred to a multisig wallet to enhance security and governance.
Technical Updates and Future Steps
The current architecture of the rewards contract allows only the distribution of a single token, which currently is set to distribute COMP. So when the ARB grants start streaming, we will face some infrastructure limitations on the distribution of the rewards. To maximize the effectiveness of the Grant, we want both ARB and COMP tokens to be rewarded to the pools.
We are currently updating the Compound rewards contract to handle ARB tokens, aiming to distribute both ARB and COMP to our users. Pending KYC completion with Arbitrum DAO, the ARB tokens will be streamed to our multisig for the growth program.
Currently, we are working in parallel on a few solutions that will allow us to distribute ARB rewards.
- Revamping the rewards contract, configuring it to allow the distribution of multiple tokens. Coding for the contract is completed with audits and on-chain deployment remaining.
- A stand-alone solution that features a web app allowing users to connect wallets and claim rewards at the end of an epoch.
- Using third-party solutions like Layer3 to distribute grants based on user involvement
At present, we estimate that with coding, audits and on-chain push, the new rewards contract will not be ready in time to distribute the ARB rewards. If our contract revisions are not ready in time, we will utilize Layer3 for distribution.
Arbitrum’s selection committee feedback
The Arbitrum LTIPP selection committee who reviewed our application was comprised of 5 members, approval from at least 3 members was necessary to proceed to the voting stage. Because the first 3 members reviewing the application approve the application, the rest of the members were not needed to review the application and it was automatically forwarded to the next stage. Compound’s application was approved by all of the first 3 reviewers. Here are the reviews left by the first three committee members.
404 DAO Feedback
Despite a larger ask, we are supporting this application as Compound presented a very clear execution plan along with proper milestones and KPIs. As one of the oldest DeFi projects there is extensive data on protocol usage and their previous incentivization programs have proved to be successful. Overall, we are confident that this is a good use of LTIPP funds and will likely drive additional large users and TVL to Arbitrum.
Wintermute Feedback
Compound’s application was strong across most criteria. They presented a strong understanding of their overall vision, goals, and benefits that this will bring to Arbitrum. While we would’ve liked to see more assets listed before incentives start, there is already a solid amount of demand for the protocol on Arbitrum. We think Compound’s integration with CEX’s, existing Whale userbase on Mainnet, and overall TVL is an important value proposition for the Arbitrum community.
They provided sufficient justification for their request grant size (although on the larger end) and their incentive design targeted more valuable and longer-lasting users.
We will be supporting this application.
Karel Feedback
Vote FOR Compound’s proposal.
Strong proposal across different parameters with a slightly high but fair final ARB ask. Good traction on Arbitrum to-date and believe the appropriate mechanisms are in-place to attract liquidity and drive users from Ethereum L1 to Arbitrum
Links and Resources
- Compound’s Grant Application Forum Post
- Snapshot Voting Results
- LTIPP Votiong Dashboard (All Applicants)
Looking Ahead
This grant is a testament to the potential for collaboration between Compound and the Arbitrum ecosystem. As we navigate this process, we aim to set a precedent for future initiatives and deepen our integration within the ecosystem.
Engage and Stay Informed
We invite the community to stay engaged through our upcoming updates and to participate actively in our forums and discussions. Together, we will maximize the impact of this grant and continue to innovate within the DeFi space.